Goldman Sachs was let off the hook today as the US Department of Justice dropped plans to bring criminal charges over claims the bank was betting against the same toxic subprime sludge it sold to clients.

In April last year senator Carl Levin demanded a criminal investigation after his subcommittee spent more than a year looking into Goldman. Chief executive Lloyd Blankfein faced a embarrassing grilling from Levin over whether it was morally correct for the firm to sell its clients products described internally as “crap”.

But the DoJ dropped the plans as it said “the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time”.

The Securities and Exchange Commission also dropped a separate probe into the firm’s role in selling a different $1.3 billion (£830 million) subprime mortgage-related deal arranged in 2006. The regulator is still pursuing a civil complaint against Goldman vice-president Fabrice Tourre over its Abacus deal, which the bank settled for $550 million in 2010.